Wishing to purchase a property for long term investment, Mrs Kan instructed estate agency A Co and estate agency B Co to find a property for her that would cost not more than $1.2 million. Not long after, A Co sent someone to take Mrs Kan to inspect a flat. The vendor asked for $1.2 million, which suited Mrs Kan's budget. After the agent had provided the relevant land search, the two parties signed a provisional agreement for sale and purchase and the vendor received a deposit of $50,000.
A few days later, an agent from B Co called Mrs Kan to say that he had found a suitable flat the vendor of which asked for $1 million. Mrs Kan inquired about the flat and found that it was in the same building as the one she had bought, only one floor lower. Mrs Kan thought that if she chose not to complete the transaction of the first flat, she would only lose the $50,000 deposit already paid and $24,000 in commissions payable by both parties. This would come up to $74,000. Deducting this from the $200,000 price difference, the other flat would cost her $126,000 less. Tempted by the apparent saving, Mrs Kan decided to break off the agreement and give up her deposit. The next day, after viewing the flat downstairs, Mrs Kan signed an agreement for sale and purchase with the owner at a price of $1 million, and paid a $50,000 deposit.
After that, Mrs Kan told the vendor of the first flat that she would not proceed with the transaction. The vendor then forfeited her deposit, and Mrs Kan also paid A Co double commission. However, a week later, the vendor of the flat downstairs decided to refund her deposit instead of carrying out the agreement because he had found a higher bidder. Mrs Kan now received $50,000 in compensation but, having spent $74,000 on the first deal, she made a loss of $24,000 and ended up with no flat.
Presumably, simple arithmetic would make some people act in the same way as Mrs Kan did. In fact, before signing any agreement, the consumer should consider carefully and, once the agreement is signed, should honour it.
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